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April 02, 2020

Canadian Government Provides More Details on Virus Relief

“We’re doing exactly what’s required,” said Finance Minister Bill Morneau in a press conference.

By  Sara Lavenduski

Three key government ministers in Canada addressed the country in the midst of the coronavirus pandemic with more details about financial relief for businesses and individuals.

As cases grow quickly across Canada and officials work to mitigate the spread, Finance Minister Bill Morneau laid out details in a news conference on April 1 of the relief package that was passed last week; Prime Minister Justin Trudeau plans to recall Parliament to pass the latest expanded version.

“Two weeks ago, we said we would do whatever it takes [to help Canadians],” said Morneau. “Today, we’re doing exactly what’s required.”

Canadian Currency

Mary Ng, Minister of Small Business, Export Promotion and International Trade, joined Morneau during the conference and added that small businesses employ 8.3 million Canadians, and 75% have fewer than 10 employees. “Everything we have announced to date is to respond to what we’ve heard from thousands and thousands of small businesses across the country, from helping them keep their employees on staff, supporting with funds and cash flow to operate and pay their bills, and to keep their costs low,” she said.

Navdeep Bains, Minister of Innovation, Science and Industry, said, “It’s also part of our government’s overall agenda to make sure that people have the ability to stay employed. … In today’s measure, it’s essential for businesses to be able to succeed in the short-term and long-term as well by keeping essential staff on their payroll.”

The focus in recent days has been on what Morneau called the government’s “three-pronged effort”: the new Canada Emergency Response Benefit (CERB) for workers who may not have been attached to an employer but have lost income due to the virus; the 75% wage subsidy that will pay employees three-quarters of their pre-crisis salary; and the Canada Emergency Business Account, through the Business Credit Availability Program, which gives business owners interest-free loans of up to $40,000.

On March 30, Trudeau announced an increase in a government-guaranteed wage subsidy from 10% as passed last week by Parliament, to 75%. In a news conference on April 2, Trudeau said the relief was the largest of its kind in the country’s history.

During the news conference, Morneau estimated the total cost in direct aid for businesses and workers to be approximately $105 billion; experts are estimating that the total cost for the entire plan to be more than $250 billion.

Morneau acknowledged that the cost is significant, but added, “Right now is not the time to be estimating where we’ll be in six to 12 months. … We’re more focused on delivering the support that people need.” He added that putting more money into people’s pockets will allow Canadians to pay rent and buy groceries and allow the country to recover quickly.

The wage subsidy, Morneau reiterated, is meant to keep as many people attached to their places of work as possible and would be available to those whose companies saw a year-over-year revenue decrease of at least 30%. Number of employees is not an obstacle to eligibility, and it’s available to all partnerships and corporations that aren’t publicly funded. The government will provide 75% of employees’ pre-virus salary up to $58,700, for a maximum of $847 a week per employee. It’s backdated until March 15, and will be in effect for the next three months, though companies would have to re-apply each month.

Meanwhile, employers participating in the subsidy have to show they’re doing what they can to pay the remaining 25% of employees’ income that the government isn’t covering, “but the system will be flexible,” said Morneau. The most important thing right now is that they have an opportunity to come back to work, and employees should “get ready to rehire people.”

Companies will be able to apply for the subsidy online through a Canadian Revenue Agency (CRA) portal that will be available soon; Morneau encouraged firms to set up direct deposit accounts with the CRA as soon as possible to facilitate the infusion of cash for employees when it becomes available for distribution, which he estimated would take about six weeks.

“The CRA system is used to administering for a large number of Canadians, [namely] all taxpayers,” said Morneau. “We’re working to make sure it’s up and running.”

Meanwhile, the Canada Emergency Business Account will provide guaranteed interest-free loans up to $40,000 to give companies credit access during this time. And the new CERB, offered jointly from the CRA and Service Canada, will offer $500 a week for 16 weeks to the almost 6 million Canadians who lost their jobs and aren’t attached to a firm.

The government is encouraging individuals to set up their CRA My Account now in order to be ready to apply when the portal opens on Monday, April 6. It will also facilitate receipt of relief such as the Child Benefit and Goods and Services Tax credits. Those who are eligible for Employment Insurance can continue to apply for that benefit.

But questions remain as to how businesses and individuals can take advantage of the relief. During the question-and-answer session with reporters, Morneau was asked how companies that can’t show year-over-year revenue comparisons, like startups that were just seeing revenue earlier this year, can apply for the wage subsidy.

“This is an unprecedented situation,” Morneau said. “We’re working on getting the administrative details out as rapidly as possible while we’re working on getting the system up and running. For those that can’t show revenue in March 2019, maybe it’s month-over-month.” He reiterated that more details would be forthcoming in the next few days.

Morneau was also asked if it’s “compulsory” or “aspirational” that business owners pay employees the remaining 25% of their salary. “We all need to work together in a time of crisis,” he answered. “We know that not everyone can [pay the extra 25%]. Some will be able to, others not. We recognize that. When they can, they will.”

When asked how the government will make sure employers aren’t “circumventing the system,” particularly with the wage subsidy, Morneau responded by speaking directly to companies: “Let’s work together to guarantee the flow of money. We trust you, and we’re confident that employees and business leaders will enable us to do that.”

He added that policies will continue to be reassessed when asked if there’s a possibility that the wage subsidy would be extended past three months.

The CRA My Account should help people receive funds more quickly, Jamie Golombek, managing director of Tax and Estate Planning with Canadian Imperial Bank of Commerce (CBIC), told BNN Bloomberg earlier this week. “On the business side, it’s much more complicated,” he said. “I’m not sure how they’re going to physically get the cash in the hands of the small business. It usually goes one way, from the employer through the payroll, directly to the government. Can they send money the other way? That remains to be seen.”

Golombek also said the vast majority of Canadians are owed a tax refund, so people should file their returns immediately if they need money; information on how to do it is online, and accountants should be available to help. “If you owe money,” he added, “the filing deadline has been delayed and the payment deadline isn’t until Sept. 1, so you’ve got lots of opportunity there to figure out how much you owe.”